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June 2, 2008

Lots of Activity is Seen at Both TVA Mega Sites in Chattanooga and Limestone County, Ala.

Speculation is running rampant in both Tennessee and Alabama as state transportation and public works officials have been seen at both the supersites that the Tennessee Valley Authority has certified near Chattanooga and Huntsville. In the last 10 days, a major grading project has begun at the Enterprise South site near Chattanooga. Meanwhile, Alabama Department of Transportation officials have been staking property across from the TVA site in Limestone County, Ala., near the intersection of I-65 and I-565. The City of Huntsville has been annexing land all the way to the TVA site and has also, through newly passed Legislation, been enabled to borrow tens of millions of dollars that could be used for site preparation and other incentives.

Regarding our item on May 19 on www.SouthernAutoCorridor.com that a reliable source had told us that Volkswagen will pick the Limestone County site, well, there is no more news to report. We have not heard from any other sources regarding anything related to the VW project. As for work being done at both sites, work that began literally at the same time, we can only speculate on what could be occurring. If you remember, a few months ago we were told by the same source that contacted us for the May 19 piece, that Volkswagen "could be two projects. An engine plant and an assembly plant." Whether that is true or the source's claim that Limestone County is the site for VW, well, only time will tell.

Michael Randle
mike@sb-d.com


Editor's Note: Here is what we wrote on May 19, 2008, on Southern Business & Development's affiliate Web site, www.SouthernAutoCorridor.com

Alabama a Done Deal for Volkswagen?

On Saturday, May 17, 2008, SouthernAutoCorridor.com heard from an anonymous yet reliable source that Volkswagen will choose Limestone County, Ala. for its first U.S. plant in 20 years. The source is the same person who tipped us off about Kia picking West Point, Ga. for its first North American assembly plant and Hyundai choosing Montgomery, Ala. for its first plant. At the time of the Kia prediction two years ago, after hearing from our source, even the Atlanta Journal Constitution had no idea the Korean automaker was even looking in Georgia.

Both the Kia and Hyundai predictions were correct and SouthernAutoCorridor.com and Southern Business & Development magazine were the first media outlets worldwide to report the sites of both projects. Other sources and simple common sense were responsible for SB&D and SouthernAutoCorridor.com correctly picking the sites for Mercedes-Benz in 1993, Toyota in San Antonio in 2003 and Nissan in Canton, Miss. in 2000. Note that we incorrectly picked the sites for Honda in 1999 (but got the state right) and Toyota last year in Blue Springs, Miss.

While this particular source has been dead-on each time, SouthernAutoCorridor.com did its due diligence and checked out other sources before publishing the Kia and Hyundai predictions. The difference between the Volkswagen site pick and Kia's and Hyundai's is that the source informed us during a weekday regarding those two Korean-based assembly plants. This time (the Volkswagen search) we were contacted by our source on a Saturday.

We will give you further details as we are sure to receive more information today and as the week progresses regarding the Volkswagen project.

Michael Randle
mike@sb-d.com

Kia Plant will Assemble Small Sedans

In a rare if not unprecedented move, Kia and Hyundai officials announced in late May that the new Kia assembly plant being built in West Point, Ga., will produce small sedans instead of SUVs. The move is a sure sign that automakers are scrambling to find vehicle models that will be hot sellers in a time when fuel costs are at $4 a gallon. Switching to fuel efficient sedans instead of the Sorento mid-sized SUV should be a good move for Kia. SUV sales have dropped 14 percent compared to this time last year.

Toyota Delays Opening of Mississippi SUV Plant

In the late spring quarter, Toyota officials announced that its Highlander model assembly plant now under construction near Tupelo, Miss., won't begin production until mid-2010 at the earliest. Originally the Japanese automaker planned to begin assembly of SUVs at the plant in late 2009 or early 2010. Toyota cited profits that are being squeezed by a slumping U.S. economy and car sales, as well as the continued drop in the dollar's value against the yen as the reasons behind the delay. Toyota has seen profits increase each year over the last nine years.

Editorial

Mixed Signals Coming from the Southern Automotive Corridor's OEMs

It is certainly not all bad here in the Southern Auto Corridor. But reports coming from some of the South's original equipment manufacturers may have some scratching their heads. First, Toyota announces it is delaying its plant opening date in Mississippi as a result of lower profits. During the announcement, Toyota officials acted as if it was no big deal. But it is a big deal when profits drop in the U.S. for mighty Toyota. They haven't seen a drop in profits in North America in nine years. 

BMW also had a major announcement in the spring quarter. It is investing $750 million more at its Greer, S.C. plant in order to increase production by 100,000 more units. And Hyundai, which saw inventory sit outside its plant in Montgomery, Ala. last year as a result of slow sales has seen sales increase compared to last year for both of its models produced in Alabama.

In the late spring quarter, Kia does a switcheroo and announces it will build small sedans instead of SUVs at its plant being built in west Georgia. The move is interesting in that we don't know if a change in models has ever occurred before an assembly plant has even opened. Could the delay with the Toyota plant mean that the Japanese auto making giant is considering the same thing?

And now we hear that Volkswagen, which as of this writing has not determined yet where it will build its first vehicles in the U.S. in over 20 years, has moved up its date of production. Originally, VW wanted to produce cars at the proposed facility in 2011. It appears they now want the first vehicle to roll off the assembly line in late 2010. That is going to be a stretch even if they break ground this summer.

And then there's Nissan. Quietly, it announced in the spring quarter that it is making dramatic changes at its plant in Canton, Miss. The overly-ambitious Mississippi project, which has only been in production for six years, included five consumer vehicle models. Now Nissan's Mississippi plant is in a state of flux. Nissan announced it will eventually halt production of the Quest minivan and the Infiniti QX, a luxury model of the big Armada SUV. The Japanese automaker will continue to produce the Altima sedan and the Titan pickup model in Mississippi and will replace the other two models with three light commercial truck vehicles in 2010.

Finally, there's Saturn. Rather, there was Saturn. GM launched the Saturn brand 18 years ago with the building of its plant in Spring Hill, Tenn. In the last year, GM has spent $900 million retooling the Spring Hill facility to produce a new Chevrolet crossover called the Traverse. As for Saturn, GM has moved production of the brand to other GM facilities, so Saturn is no longer being assembled in Spring Hill.

Michael Randle
mike@sb-d.com

Another Korean Supplier to Open in East Alabama

Daedong Hi-Lex announced in the spring quarter it is investing about $11 million on a new 65,000-square-foot facility in Chambers County, Ala., that will produce door systems for Kia's new plant in West Point, Ga. The plant is expected to initially house 103 employees.

Johnson Controls Creating 310 Jobs in West Georgia

Wisconsin-based Johnson Controls announced in late May it plans to locate a new facility in west Georgia. The company plans to build a 130,000-square-foot facility in Harris County, located midway between Columbus, Ga. and the new Kia plant in Troup County, Ga. The company will manufacture complete seat systems and door panels for Kia Motor Manufacturing Georgia. Already the Kia plant is directly responsible for creating more than 5,000 new jobs in Georgia. 

Korean Tire Manufacturer Breaks Ground in Macon, Ga.

In May, Gwangju, Korea-based Kumho Tire broke ground on its first U.S. manufacturing facility in Macon. The new plant will create 450 new jobs and represents a $225 million investment. Kumho Tire opened a new distribution center in Henry County, just south of Atlanta in 2007.

Sewon America Breaks Ground in LaGrange, Ga.

Another Tier-1 Kia supplier has broken ground on a new plant in west Georgia. Daegu, Korea-based Sewon America broke ground in May on a $170 million, 700-employee plant that is being built at the Callaway South Industrial Park in LaGrange. Sewon will manufacture stamped chassis and body components for the new Kia plant.

GM's Doraville, Ga. Plant for Sale

GM, which is closing its 60-year-old Doraville assembly plant in September, has hired a commercial real estate firm to sell the property that is located just inside the I-285 perimeter in Atlanta. Redevelopment of the plant property is expected to move quickly if there are no major environmental concerns considering it is one of the largest parcels of land available inside the perimeter. The plant employs about 3,000 workers.

Kia Supplier DAEHAN Solution to Locate Facility in Harris County, Ga.

Kia supplier DAEHAN Solution announced in the spring quarter it is investing $35 million in a 160,000-square-foot facility in Harris County. The deal is expected to create 300 new jobs. The company will provide NVH (noise, vibration and harshness) systems and other interior components for the new Kia plant in West Point, Ga.

American Howa Kentucky Celebrates Grand Opening

In the spring quarter, Kentucky Gov. Steve Beshear was on hand to celebrate the grand opening of American Howa Kentucky, Inc.'s new facility in Bowling Green. The company is manufacturing dash insulators, headliners and other interior products for Toyota, Nissan, Honda and other OEMs. The deal represents a $10 million investment and 61 new jobs.

Parts Supplier Expanding in North Carolina

In the spring quarter, International Automotive Components Group, a maker of vehicle interior systems, including carpet and trunk liners, will add workers in Stanly and Montgomery counties. The addition will create a total of 140 jobs during three years and represents an investment of $10.6 million at plants in Albemarle and Troy. The Michigan-based company currently employs 1,112 workers at four facilities in North Carolina.

New Facility Announced in Spartanburg, S.C.

Platronics Seals is moving its production facility from Clifton, N.J. to Spartanburg, S.C. The $2 million investment is expected to create 20 new jobs. The company manufactures hermetic packages for automotive industry among other industries.

Moss Motors Investing $5 Million in Virginia

Moss Motors, a supplier of specialized automotive parts in the British restoration market, is locating a $5.15 million distribution center in Dinwiddie County, Va. The California-based company will create 90 new jobs.

Hino Moving Work to West Virginia

Because of slow sales, Hino Motors USA is closing its commercial truck assembly plant it operates with Toyota in California and moving all work in the U.S. to its Williamstown, W. Va. assembly facility. Hino assembles Class 4-7 trucks in West Virginia.

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